Time to Kill the Death Panel

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.

June 23, 2017 - 12:59 — CAGW Staff

With Congress poised to repeal and replace Obamacare, the time has come to abolish the Independent Payment Advisory Board (IPAB), a little-known but dangerous provision within the Patient Protection and Affordable Care Act (ACA). Congress needs to repeal IPAB, and if it were not for the arcane rules surrounding the budget reconciliation process being used to repeal Obamacare, it certainly would have been included in either of the repeal-and-replace bills being debated.

IPAB, often aptly referred to as the “Death Panel,” because its decisions could result in healthcare rationing, was characterized by Obamacare supporters as a way to reduce Medicare spending. It is supposed to consist of 15 members chosen by the president, with the advice and consent of the Senate, and after consultation with leaders in the House of Representatives.

Members of the board are supposed to be individuals with national recognition for their expertise in healthcare finance, economics, actuarial science, healthcare services and delivery, and related fields. Currently, no board members have been chosen to serve, meaning that IPAB’s responsibilities fall solely to the secretary of Health and Human Services (HHS). As the Healthcare Leadership Council stated, “IPAB divests Congress of its authority for Medicare payment policy and places it in the hands of an unelected executive branch entity.” This reduces patients’ influence in Medicare decision-making by taking power away from their representatives, who they can hold accountable.

If Medicare spending should rise above a certain targeted growth rate established by the Centers for Medicare and Medicaid Services actuary, IPAB would be required to submit a proposal to Congress within a limited time frame to reduce the per capita rate of growth in Medicare spending. If the board does not submit a proposal, the HHS secretary must do so.

While there are restrictions within ACA that bar the board from changing certain aspects of Medicare for beneficiaries, such as raising premiums, increasing cost sharing, or restricting benefits, it can cut payments to providers, pharmaceutical manufacturers, medical equipment suppliers, and eventually hospitals. Reduced payment rates will encourage providers to treat fewer Medicare beneficiaries, raise prices for private sector consumers to offset their losses from seeing Medicare patients, or both. Although the board is not technically “rationing” healthcare, this is what would occur when providers reduce the number of Medicare patients they treat.

IPAB’s decisions are not subject to judicial review. However, Congress can override IPAB spending decisions if both houses (including 60 percent of the Senate) agree to a plan that matches the proposed spending cuts which must be accomplished within a limited legislative time frame. This makes it very difficult for Congress to prevent IPAB’s recommendations from taking effect.

Due to IPAB’s unprecedented power, members of Congress from both sides of the political aisle have long opposed its existence. IPAB’s funding was rescinded in FY 2017, but that does not mean the board itself is eliminated or no longer has any power. IPAB has a permanent annual appropriation to fund operational outlays and automatically receives new funding each year, so IPAB repeal requires specific legislation outside of the appropriations process. It is essential to repeal IPAB before Medicare costs reach the threshold that would trigger action by the board or the HHS secretary.

Bipartisan bills have been introduced in both houses of Congress to put an end to IPAB. Sen. Ron Wyden (D-Ore.) introduced, S. 251, the “Protecting Medicare from Executive Action of 2017,” which has 11 Democratic cosponsors. Sen. John Cornyn (R-Texas) introduced a similar bill, S. 260, “The Protecting Seniors’ Access to Medicare Act,” which has 36 Republican cosponsors. Rep. David Roe (R-Tenn.), introduced H.R. 849, an identical bill to Sen. Cornyn’s, and has 216 Democratic and Republican co-sponsors.

These bills illustrate support of a healthcare issue where Republicans and Democrats find common ground. It is important for Congress to move on one of them soon as possible. Because of Senate rules, IPAB repeal cannot be considered under the budget reconciliation process currently being used to repeal and replace Obamacare. Therefore, it would have to be considered in the “phase three” bucket of House Speaker Paul Ryan’s (R-Wis.) step-by-step approach to dismantle Obamacare.

The White House included repeal of IPAB in its 2018 budget proposal. The cost for doing so was $7.6 billion over 10 years. Fiscal conservatives should not worry about the price tag, as the House reconciliation bill being used to repeal Obamacare cuts the deficit by $119 billion over 10 years, and the Senate will certainly be able to find similar savings. It is critical to return oversight and control of Medicare spending to elected representatives and not retain it with unelected bureaucrats. Congress needs to act now.